Q23. Sale of equipment
Entity A sold the following equipment.
(a) Cost of equipment = $70,000
(b) Accumulated depreciation = $63,000
(c) Sale price of equipment = $8,500
Prepare a journal entry to record this transaction.
A23. Decrease in accumulated depreciation is recorded on the debit side. Decrease in equipment is recorded on the credit side.
| Debit | Credit | |
| Cash | 8,500 | |
| Accumulated depreciation | 63,000 | |
| Equipmen | 70,000 | |
| Gain on sale of equipment | 1,500 |
[Note]
1. Book value of equipment = Cost of equipment – Accumulated depreciation
= $70,000 – $63,000 = $7,000
2. Gain on sale of equipment = Sale price – Book value of equipment
= $8,500 – $7,000 = $1,500
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